Ex-Wife Never Removed as Beneficiary and Collects Life Insurance

Tennessee case summary on life insurance proceeds after divorce.

Voya Retirement Insurance and Annuity Company v. Mary Beth Johnson, et al. 

In 2001, the husband in this Tennessee case enrolled in a retirement and life insurance plan though his employer and named his wife the beneficiary.  They divorced in 2002, and the marital dissolution agreement awarded the husband all interest in the plan.  However, the husband never changed the name of the beneficiary, and his ex-wife was still named when he died in 2014.

The insurance company paid the money into the court in an interpleader action, and the ex-wife and the estate both made their claims.  The trial court held that the estate was entitled to the money, and the ex-wife appealed to the Tennessee Court of Appeals.

On appeal, the wife pointed to a Tennessee statute governing how beneficiaries are to be designated.  Under that statute, she argued, the marital dissolution agreement did not serve to make the change.

The appeals court first held that the statute she cited did not apply, but that was not the end of the analysis.  Instead, it looked at the exact language of the plan, which stated that amendments to the beneficiary must be made in written notice to the insurance company.

The court did concede that some courts interpret such provisions differently, and would allow the marital dissolution agreement to serve to change the beneficiary.  Instead, the court reiterated that the retirement plan was a contract.  The marital dissolution agreement gave the husband the right to change the beneficiary.  But since he never actually made the change, the court held that the former wife remained the beneficiary.

For these reasons, the Court of Appeals reversed the lower court’s ruling.  It also held that the wife had the right to present her claim for bad faith by the insurance company, and that this claim should not have been dismissed.  Therefore, it remanded the case for further proceedings.

No. M2016-00435-COA-R3-CV (Tenn. Ct. App. Oct. 27, 2017).

See original opinion for exact language.  Legal citations omitted.

To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.